Transactional Funding

Transactional funding is a short-term loan — often lasting only hours — that funds the first leg of a double closing and is repaid the same day from the second closing.

Transactional funding is a loan measured in hours, not years. It funds the first leg of a double closing: the wholesaler actually buys the property from the seller (the A-to-B closing), then resells it to the end buyer (the B-to-C closing) the same day — sometimes the same hour. The lender wires 100% of the A-to-B purchase price and is repaid, plus a flat fee, as soon as the B-to-C side closes. Because the end buyer's money is already lined up, transactional lenders generally skip credit checks and appraisals; what they underwrite is the second closing.

Here is the shape of a real deal. You contract a house at $100,000 and have an end buyer at $115,000, but you want a double closing instead of an assignment — maybe the spread is big enough that you would rather the buyer not see it. A transactional lender funds the $100,000 purchase, the B-to-C closing follows the same day, the lender is repaid with a fee of roughly $2,000, and you keep the remaining spread after closing costs.

What beginners get wrong: assuming the funding replaces a solid end buyer. It does the opposite — transactional lenders fund only when the B-to-C closing is verifiably ready, usually with the end buyer's money already in escrow. If your buyer wobbles, the funding disappears with them. Budget for two sets of closing costs, and confirm your title company will run back-to-back closings before closing day, not on it.